A Short List of Internet Credit Card Gateways
Web Commerce Today, Issue 17, December 15, 1998
This article contains older information. Go here for newer information on shopping carts and transactions.
Since we surveyed credit card payment gateway systems on the Web in August 1997, the landscape has changed a lot. The back-end technology and reliability of these services has improved greatly. There are many players in this field, so it's impossible to provide a comprehensive list. (For that see Yahoo's Transaction Clearing/Credit Card Merchant Services section). The ones we've include seem to be the US industry leaders, though there are doubtless many other excellent companies. We invite comments from our overseas readers on the systems that have emerged in their countries, and we'll try to compile a list of them in the future.
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CyberCash, Reston, Virginia
CyberCash (http://www.cybercash.com) is certainly the most recognized name in payment gateways, but their road has been a rocky one. While they've been providing services since 1995, their first two versions required that shoppers download proprietary "wallet" software before making a purchase, and so created a barrier to instant sales. ISPs complained that their systems were difficult to install. However, their CashRegister 3 service is reputed to be relatively painless. Most of the complex software is on CyberCash's server with less that 100K of code on the merchant's server. The code on the merchant's server contacts CyberCash through strong 3DES encryption in addition to SSL encryption. CyberCash has finally dropped its proprietary "wallet" and added the ability to take checks online, as well.Internationally, CyberCash has joint ventures with a consortium of banks in Japan and Germany, and a partnership with Barclay's Bank in the UK. They are expanding their foothold to cover the G7 nations where most of the e-commerce is taking place.
In the US, CyberCash acquired ICVerify, a leader in the technology that allows mail order and phone sales companies to process credit cards through computer software over a modem. For smaller Internet merchants CyberCash's Cash Register 3 service is available. However, now they have a solution for the larger merchants with 50,000 to 100,000 transactions a month, who find it more cost effective to process transactions directly with the processor, using a modem and software supplied by CyberCash (ICVerify).
CyberCash has worked hard to build partnerships with a great many processors, so the chances are excellent that a processing service will work with CyberCash's system. But CyberCash has achieved its prominence through spending large amounts of money in advertising and not yet showing any profit. So long as investors ante up, however, CyberCash will continue to build momentum.
CyberCash is integrated into nearly all important store-building software packages. These include: 1INTERNET Corp., Able Solutions, BIT Software, Breakthrough Software, BroadVision, Connect Inc., Ecware, Encanto, Forman Interactive, GTE - CyberTrust, iCat, MyStore, INEX, Inline Internet Systems, Internet Factory, Intershop, InterWorld Corporation, Lotus Domino.Merchant, Mercantec SoftCart, Microsoft Site Server, Commerce Edition, Miva, Netscape CommerceXpert family, O'Reilly WebSite Professional 2.0, ObjectNet's iShopping Wizard, Open Market ShopSite, Oracle's Internet Commerce Server, Pandesic, PDG Software, QuinnCom's ECStore, RES Cybermall, Rocky Mountain Internet e-SELL, TalentSoft, and Virtual Spin.
CyberCash uses financial institutions as one of its main sales channels, and their fees vary. The CyberCash website indicates that merchants should expect to pay a one-time service set-up fee of $500 to $1000, and monthly service fees of $40 to $80 per month or 20 to 60 cents per transaction.
Authorize.Net, Provo, Utah
Authorize.Net (http://www.authorizenet.com) bills itself as "the world's leading payment authorization service for online businesses," and serve over 13,600 merchants at this writing. They certainly have reached deep market penetration, probably because of their use of commission-based salespeople. Resellers include representatives of Cardservice International and many others. The sales process, apparently, is to help a prospective merchant secure a Merchant Credit Card account and then hook them up with Authorize.Net as their Web gateway to the processor.At first glance, Authorize.Net seems to be integrated into many store-building software systems: Dansie, Miva Merchant, Cart32, WebCart, Breakthrough Software, iHTML Merchant 2, ShopFactory, CartManager, Americart, VirtualCart, Easy Cart, CoolCart, CartMonster, Deluxe Cart, Able Commerce, Make-a-Store, Just Add Commerce, PDG, RevUp, Commi$$ion Cart, QuikStore, EZMall2000, 3-2-1 Website!, ICSite, Your Storefront on the Web, Hazel, and Sales Cart. But none of these is in the first (or even second tier) of established store-building software. This means that few of the merchants using Authorize.Net will be able to employ the kind of software necessary to build larger and more complex stores. Apparently, most of the merchants using Authorize.Net are of the mom and pop online store variety. In addition, Authorize.Net works only with First Data Corp (the largest processor), not others.
Authorize.Net doesn't display its prices on the Web. These must be obtained from licensed resellers. To me this is a red flag. It would be helpful for merchants to see prices clearly stated up front.
Automated Transactions Services (ATS), Los Angeles, California
ATS (http://www.atsbank.com), with its SecureProcess technology, seems to be an important emerging player in this field. They have the ability to interface with a wide variety of processors, unlike some of their competitors. They have also developed the kind of strong technology that made them the exclusive vendor for IBM's Home Page Creator product. David Goldfarb, Chief Operating Officer, says that the encryption of messages between the merchant's server and ATS uses 3DES encryption in addition to SSL to prevent "packet sniffing."ATS has also simplified the process of securing a Merchant Credit Card Account through an alliance with Heartland Bank, with a clearly-stated description of responsibilities and fee structures. They also initiated the first recurring billing system that helps merchants track initial sales vs. recurring sales. They provide a membership management system, with tracking of usernames and passwords, in addition a payment gateway that supports both credit card transactions, fraud checking, and online checks using the ACH network.
When we talked about price, Goldfarb acknowledged that they weren't the lowest. "Some are priced lower," he said. "but they won't be able to sustain their technology. You need some price point that supports the infrastructure for the network." He notes that they are the only payment gateway that has been in the black since 1995.
ATS can be integrated into several major store-building packages, including those offered by HiWay Technologies, Mainspring, IBM's Home Page Creator, Intershop, Mercantec, INEX, Maestro, GlobeStores, and QuikStore.
CyberSource, San Jose, California
CyberSource (http://www.cybersource.com) began as a provider for electronic software distribution (ESD). Because of extremely high incidence of credit card fraud against merchants, they developed the first fraud screening system, IVS, which can reduce a merchant's risk to less than 1%.While they offer standalone credit card processing gateway services, their business model is to offer a variety of additional order processing management services for their clients. "Doing business on the Net involves more than just payment processing," says Marketing Manager Brad Hydorn. For example, they can provide notification of an order to a fulfillment house via EDI or secure e-mail. They can also provide tax calculation in the US and VAT taxes in Europe, using any of 26 currencies. The company has an office and data center in the UK for global business, and 16 network points of presence around the world.
CyberSource provides bridges into several higher-end store-building packages: BroadVision, CobWeb, HTML Script, IBM Net.Commerce, Information Builders, Intershop, and Microsoft Site Server Commerce Edition.
Setup is $500 to $2500. The transaction fee varies with volume, but ranges from as low as 12 cents for payment processing, and 30 cents for fraud screening, and 50 cents for licensed digital delivery. Minimum monthly billing $95 will exclude some of the smallest merchants.
Two of their competitors mentioned them as a top-flight company. George DeCourcy of Anacom Merchant Services says, "CyberSource is a quality player -- first on the list ... Anacom is next <grin>" ATS' Goldfarb, too, had nothing but praise for CyberSource.
PaymentNet, Pleasanton, California
PaymentNet, Inc. (http://www.paymentnet.com), formerly Segue Systems, is a newer competitor among gateways to the processing system. "Many gateway vendors are talking at the technology feature level," says Greg Xenakis, Director of Corporate Marketing. Now that gateways are now becoming commodities, he sees PaymentNet's uniqueness in their willingness to "handhold and educate customers."PaymentNet's system at the merchant's end is a small 200K CGI program that transfers credit card information over a secure SSL Internet connection. Recently, PaymentNet has offered an inexpensive pay portal designed for small merchants that handles the order, tax calculation, and shipping for up to 60 transactions for $15 per month. It is offered through several ISPs (Anaserve, HiWay Technologies, and Sage Networks)
Pricing for PaymentNet's main service is also quite reasonable. A monthly fee of $49, for example, allows up to 250 transactions per month, and merchants can save money by paying these fees a year in advance. Price per transaction is lower for companies that process larger quantities of transactions.
Merchants have secure access to online transaction reports. Transactions may be set up to authorize, purchase (delayed funds settlement), purchase (same-day funds settlement), or refund. Merchants that sell products that are not ready for immediate shipment can elect to authorize the sale and them implement delayed funds settlement when shipment is made.
PaymentNet is available for web servers that run on Windows NT and several flavors of Unix (BSDI Linux, DEC Alpha, SCO UnixWare/Open Server, SGI IRIX and Sun Solaris). Interfaces are available for INEX, Open Market ShopSite, Net Ventures ShopBuilder, and Mercantec SoftCart; iCat and Intershop are in process. PaymentNet supports three processors: First Data Corp., Nova, and Payment Tech, and is adding others. We have used PaymentNet for the past year and a half for Web Commerce Today subscriptions, and have been pleased with the service.
Anacom Merchant Services, Dallas, Texas
Anacom Merchant Services (http://www.anacom.com), with their SecurePay product, is one of the smaller players in the industry, but in my view provide an excellent, well-priced service, especially for smaller businesses that do not have a secure server. Typically the customer is transferred to a customized page on Anacom's server when it comes time to enter credit card information. Their service includes fraud screening and an automatic e-mail order confirmation to the purchaser, online reports and a back office interface for the merchant. The cost is $34.95 per month plus 25 cents per transaction. The set-up fee is $279.95 plus 2 months in advance. Anacom can be incorporated into iCat, Intershop, Mercantec, Mia Merchant, INX, EasyCart, and WebCart.
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